The Union Bank of India (UBI), through its international banking division, announced on Wednesday that for lending purposes, it has replaced the London Interbank Offered Rate (LIBOR) with the Alternative Reference Rate (ARR). ).
This change is in line with the Reserve Bank of India forcing all banks and other financial institutions to stop using LIBOR following a rate-fixing scandal uncovered a few years ago. The bank said it was among the first banks in India to adopt ARR.
The bank said it has already entered into ARR deals through its overseas branches (in Hong Kong, DIFC Dubai and Sydney) and through its domestic branches.
“The transition of LIBOR is one of the important events globally as it will affect all stakeholders in the international market. The transition of LIBOR and the adoption of the accepted alternative reference rates (ARRs) developed in various jurisdictions are significant and require careful preparation to manage potential customer protection, reputational and litigation risks, as well as to avoid disruptions to the safety and resilience of financial institutions and the overall financial stability of the economy . ) for sterling loans etc,” the Union Bank of India said in its statement.
The bank said it had also sanctioned facilities tied to the Secured Overnight Funding Rate (SOFR).
All new transactions will be referenced to the new benchmark rates from January 1, 2022, in line with recommendations from RBI and other banking regulators around the world.
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